Alpha Company on March 1 2017 has a beginning Work in Proces

Alpha Company, on March 1, 2017 has a beginning Work in Process inventory of zero. All materials are added into production at the beginning of its production. There is only one production WIP inventory. On March 1, Alpha started into production 10,000 units. At the end of the month there were 5,000 units completed and transferred into the Finished Goods Inventory. The ending WIP was 40% complete with respect to conversion. For the month of March the following costs were incurred and recorded in the WIP: Direct Material Direct Labor Factory Overhead $20,000 9,000 40,000 Alpha uses the weighted-average process costing method. Use this information to determine for the month of March: (Round& enter final answers to the nearest penny.) l. the cost per equivalent unit of direct material 2. the cost per equivalent unit of conversion

Solution

Answers:

1. $ 2 per Unit

2. $ 7 per Unit

3. $ 9 per Unit

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Calculation of Equivalent units:
		Equivalent units
	Physical units	Direct materials	Conversion
Units in beginning inventory	0
Units transferred in	10,000
Units to be accounted for	10,000
Units completed and transferred out	5,000	5,000	5,000
Units in ending inventory	5,000	5,000	2,000
Units accounted for	10,000	10,000	7,000
*2,000 units (5,000 units x 40%)